Question 1

A business pays each of its two office employees each Friday at the rate of $60 per day for a five-day week that begins on Monday.If the accounting period ends on Tuesday and the employees worked on both Monday and Tuesday,the adjusting entry to record the salaries earned but unpaid is:
A) Debit Unpaid Salaries $120 and credit Salaries Payable $120.
B) Debit Salaries Payable $240 and credit Office Salaries Expense $240.
C) Debit Office Salaries Expense $120 and credit Salaries Payable $120.
D) Debit Office Salaries Expense $240 and credit Salaries Payable $240.
E) Debit Salaries Expense $240 and credit Cash $240.

Accepted Answer

The answer of A business pays each of its two...

Question 2

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are called
A) Operating expenses.
B) Prepaid expenses.
C) Unearned expenses.
D) Accounts payable.
E) Accrued expenses.

Accepted Answer

Incurred but unpaid expenses are known as accrued expenses, which are recorded during the adjusting process with a debit to an expense and a credit to a liability. This ensures that the expenses are appropriately recorded in the period they are incurred, even if payment is not made until a later period. Therefore, the correct answer is option E, accrued expenses.

Question 3

On July 1,2015,Nuby Trucking Company purchased a new truck for $52,000.The truck is estimated to have a useful life of six years and a residual value of $10,000.How much depreciation expense will be recorded for the truck during the year ended December 31,2015?
A) $3,000.
B) $3,500.
C) $4,000.
D) $6,000.
E) $7,000.

Accepted Answer

The answer of On July 1,2015,Nuby Trucking Company purchased a...

Question 4

For a prepaid expense,the adjusting entry would:
A) Result in a debit to an expense account and a credit to an asset account.
B) Cause a prepaid expense to be overstated and liabilities to be understated.
C) Result in a credit to an expense account and a debit to an asset account.
D) Result in a debit to a liability account and a credit to an asset account.
E) Decrease cash.

Accepted Answer

Adjusting entries for prepaid expenses involve debiting the relevant expense account to recognize the expense incurred during the period and crediting the prepaid expense asset account to reduce its balance, reflecting the portion of the prepaid amount that has been used up.

Question 5

The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is:
A) Debit Unpaid Salaries and credit Salaries Payable.
B) Debit Salaries Payable and credit Salaries Expense.
C) Debit Salaries Expense and credit Cash.
D) Debit Salaries Expense and credit Salaries Payable.
E) Debit Cash and credit Salaries Expense.

Accepted Answer

The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is to Debit Salaries Expense and credit Salaries Payable. This entry recognizes the expense of the salaries earned but unpaid during the period and creates a liability for the unpaid wages owed to employees at the end of the period. Option A would be opposite of the correct entry, option B would be used to record the payment of salaries while option C would be used to record salaries paid during the period. Option E is incorrect because it records a payment rather than an accrual of unpaid wages.

Question 6

Which of the following does not require an adjusting entry at year-end?
A) Accrued interest on notes payable.
B) Supplies used during the period.
C) Cash invested by owner.
D) Accrued wages.
E) Expired portion of prepaid insurance.

Accepted Answer

Cash invested by owner does not require an adjusting entry at year-end as it does not affect any income statement or balance sheet accounts. It is simply recorded as an increase in the owner's equity account.

Question 7

On May 1,2015.Bee Advertising Company received $2,500 from Julie Cee for advertising services to be completed by April 30,2016.Assume the receipt was recorded as unearned fees and that at December 31,2015,$1,000 of the fees had been earned.The adjusting entry prepared by Bee on December 31,2015,should include:
A) A debit to Unearned Fees for $500.
B) A credit to Unearned Fees for $500.
C) A credit to Earned Fees for $1,000.
D) A debit to Earned Fees for $1,000.
E) A debit to Earned Fees for $500.

Accepted Answer

The adjusting entry should recognize the earned portion of the fees. Since $1,000 of the fees have been earned by December 31, 2015, a credit to Earned Fees for $1,000 is needed to reflect this revenue.

Question 8

If accrued salaries were recorded on December 31 with a credit to Salaries Payable,the entry to record payment of these wages on January 5 would include:
A) A debit to Cash and a credit to Salaries Payable.
B) A debit to Cash and a credit to Prepaid Salaries.
C) A debit to Salaries Payable and a credit to Cash.
D) A debit to Salaries Payable and a credit to Salaries Expense.
E) No entry would be necessary on January 5.

Accepted Answer

Since accrued salaries were recorded on December 31 with a credit to Salaries Payable, it means that the company owes the employees for the work they have done but has not paid them yet. When the company makes the payment on January 5, it needs to reduce the liability of Salaries Payable by debiting it and decrease the asset of Cash by crediting it. Therefore, the entry to record payment of these wages on January 5 would include a debit to Salaries Payable and a credit to Cash.

Question 9

The Creative Company has several insurance policies in force with payments due at various times.The following information refers to prepaid insurance and insurance expense on two successive dates.  The amount of cash paid for insurance by Creative Company in 2016 was:
A) $3,250.
B) $3,750.
C) $4,500.
D) $5,000.
E) $8,750.

Accepted Answer

The answer of The Creative Company has several insurance policies...

Question 10

HCF,a finance company,lends Able Business $12,000 at 5% on December 1,2015.HCF's adjusting entry on December 31,2015,should include:
A) A debit to Interest Earned for $50.
B) A credit to Interest Receivable for $50.
C) A credit to Interest Earned for $50.
D) A debit to Cash for $600.
E) A debit to Interest Expense for $600.

Accepted Answer

The adjusting entry on December 31, 2015, should recognize the interest earned by HCF during the month of December. The interest earned on the loan can be calculated as:

$12,000 x 0.05 x (31/365) = $50.41 (rounded to the nearest cent)

Since the amount earned is less than $1, we can round it down to $50.

The adjusting entry should include a credit to interest earned for $50, which will increase HCF's income for the period. There is no need to record a debit to interest expense, as HCF has already earned the interest income. There is also no need to adjust the cash balance, as the loan and interest have already been recorded when the loan was granted. Therefore, options A, B, D, and E are not correct.

Note: It's important to recognize that interest is typically accrued daily, based on the outstanding balance of the loan. In this case, we assumed that the loan balance was $12,000 for the entire month. However, if the actual balance varied during the month, the interest earned would also change.

Question 11

Which of the following assets is not depreciated?
A) Store fixtures.
B) Computers.
C) Land.
D) Buildings.
E) Trucks.

Accepted Answer

Land is not depreciated because its value generally does not decrease over time.

Question 12

Accrued revenues:
A) Are paid in advance.
B) At the end of one accounting period often result in cash receipts from customers in the next period.
C) At the end of one accounting period often result in cash payments in the next period.
D) Are also called unearned revenues.
E) Are listed on the balance sheet as liabilities.

Accepted Answer

Accrued revenues are revenues that have been earned but not yet received. At the end of an accounting period, these revenues will typically result in cash receipts from customers in the next period. Therefore, option B is the correct answer.

Question 13

The premium on a three-year insurance policy purchased on June 30,2015,was $36,000.What is the amount of insurance expense that should be presented on the company's income statement for the year ended December 31,2015?
A) $500.
B) $1,000.
C) $3,000.
D) $6,000.
E) $8,000.

Accepted Answer

The insurance expense for the year ended December 31, 2015, is calculated by determining the expense for the six months from July 1, 2015, to December 31, 2015. The annual premium is $12,000 ($36,000/3 years), so for six months, the expense is $6,000 ($12,000/2).

Question 14

Vanderet's Computer Business owns computer equipment which cost $3,240 and has an expected useful life of three years.No residual value is expected.At the company's yearend,December 31,the equipment's book value is $2,520.In what month was the computer purchased using the straight-line depreciation method?
A) January
B) March
C) May
D) June
E) August

Accepted Answer

Using the straight-line depreciation method, we can determine the annual depreciation expense:
Annual depreciation expense = (Cost - Residual Value) / Useful Life
Annual depreciation expense = ($3,240 - $0) / 3 years = $1,080 per year
To determine the monthly depreciation expense, we divide the annual amount by 12:
Monthly depreciation expense = $1,080 / 12 = $90 per month
To determine the number of months since the purchase of the equipment, we can subtract the book value from the cost and divide by the monthly depreciation expense:
Number of months = (Cost - Book Value) / Monthly depreciation expense
Number of months = ($3,240 - $2,520) / $90 per month = 8 months
Therefore, the computer was purchased in May (8 months prior to December 31).

Question 15

The Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the year?
A) $2,700.
B) $2,900.
C) $3,300.
D) $3,500.
E) $3,700.

Accepted Answer

The amount of office supplies purchased during the year can be calculated as the difference between the beginning and ending balance, plus the office supplies expenses for the year:
Purchased office supplies = Beginning balance + Office supplies expenses - Ending balance
= $600 + $3,100 - $400
= $2,900. 
Therefore, the best choice is B.

Question 16

Laurey's Pet Emporium purchased equipment on January 1 for $35,000.The equipment will be used for five years,after which the estimated residual value will be $2,000.Using straight-line depreciation,what is the depreciation expense for the first year of the asset's life?
A) $4,000
B) $5,600
C) $6,600
D) $7,000
E) $7,400

Accepted Answer

The answer of Laurey's Pet Emporium purchased equipment on January...

Question 17

Lang leased a portion of its store to Pang for 12 months beginning on November 1,at a monthly rate of $400.Pang paid the entire $4,800 on November 1,which Lang recorded as unearned revenue.The journal entry made by Lang at year-end,December 31,would include:
A) A debit to Rent Earned for $400.
B) A credit to Unearned Rent for $400.
C) A debit to Cash for $800.
D) A credit to Rent Earned for $800.
E) A debit to Unearned Rent for $4,800.

Accepted Answer

At year-end, Lang needs to recognize the earned revenue for the month of November and December. Lang will debit Rent Earned for 2 months x $400= $800, to recognize its revenue. The unearned rent of $4,800 has already been recorded as a liability at the time of receipt of cash, and it will not be recorded again in the year-end entry.

Question 18

On January 31 of this year,Gallery Corp.recorded 2 days of accrued salaries ($140)for its employees.On February 13,the company paid its employees a total of $700.The correct journal entries at January 31 and February 13 are:
A)

B)

C)

D)

E)

Accepted Answer

The answer of On January 31 of this year,Gallery Corp.recorded...

Question 19

In January,Denton Mabrey College received $120,000 in Unearned Tuition Revenue from its students for the spring semester,which lasts four months.On January 31,the college should recognize which amount for tuition revenue?
A) $30,000.
B) $60,000.
C) $80,000.
D) $90,000.
E) $120,000.

Accepted Answer

Unearned tuition revenue is recognized as earned over the duration of the academic term. In this case, the spring semester lasts four months, meaning that 1/4th of the unearned tuition revenue should be recognized as earned for each month. Therefore, on January 31 (the end of the first month of the semester), Denton Mabrey College should recognize 1/4th (or $30,000) of the unearned tuition revenue as earned tuition revenue.

Question 20

An adjusting entry was made on December 31,2015,to accrue salaries expense of $1,200.Which of the following entries would be prepared to record the next payment of salaries,on January 5,2016,in the amount of $3,000?
A)

B)

C)

D)

E)

Accepted Answer

The answer of An adjusting entry was made on December...

Quiz 3: Adjusting Accounts for Financial Statements

A business pays each of its two office employees each Friday at the rate of $60 per day for a five-day week that begins on Monday.If the accounting period ends on Tuesday and the employees worked on both Monday and Tuesday,the adjusting entry to record the salaries earned but unpaid is:

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are called

On July 1,2015,Nuby Trucking Company purchased a new truck for $52,000.The truck is estimated to have a useful life of six years and a residual value of $10,000.How much depreciation expense will be recorded for the truck during the year ended December 31,2015?

For a prepaid expense,the adjusting entry would:

The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is:

Which of the following does not require an adjusting entry at year-end?

If accrued salaries were recorded on December 31 with a credit to Salaries Payable,the entry to record payment of these wages on January 5 would include:

The Creative Company has several insurance policies in force with payments due at various times.The following information refers to prepaid insurance and insurance expense on two successive dates. The amount of cash paid for insurance by Creative Company in 2016 was:

HCF,a finance company,lends Able Business $12,000 at 5% on December 1,2015.HCF's adjusting entry on December 31,2015,should include:

Which of the following assets is not depreciated?

Accrued revenues:

The premium on a three-year insurance policy purchased on June 30,2015,was $36,000.What is the amount of insurance expense that should be presented on the company's income statement for the year ended December 31,2015?

The Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the year?

Laurey's Pet Emporium purchased equipment on January 1 for $35,000.The equipment will be used for five years,after which the estimated residual value will be $2,000.Using straight-line depreciation,what is the depreciation expense for the first year of the asset's life?

Lang leased a portion of its store to Pang for 12 months beginning on November 1,at a monthly rate of $400.Pang paid the entire $4,800 on November 1,which Lang recorded as unearned revenue.The journal entry made by Lang at year-end,December 31,would include:

On January 31 of this year,Gallery Corp.recorded 2 days of accrued salaries ($140) for its employees.On February 13,the company paid its employees a total of $700.The correct journal entries at January 31 and February 13 are:

In January,Denton Mabrey College received $120,000 in Unearned Tuition Revenue from its students for the spring semester,which lasts four months.On January 31,the college should recognize which amount for tuition revenue?

An adjusting entry was made on December 31,2015,to accrue salaries expense of $1,200.Which of the following entries would be prepared to record the next payment of salaries,on January 5,2016,in the amount of $3,000?